Shareholder suit may offer best chance to fix Wells Fargo

The bills keep piling up for Wells Fargo as it grapples with a scandal where employees signed up customers for millions of accounts they never asked for. There’s $110 million to settle a class-action lawsuit, on top of $185 million in fines to regulators. The company has made amends in other ways, firing CEO John Stumpf, adding two independent directors to the board and slashing executive bonuses.

The question is whether these moves are enough to suck out the poison that has infected the bank.

Joe Cotchett doesn’t think so. The Burlingame trial lawyer filed a suit last fall in San Francisco Superior Court on behalf of shareholders to force executives and directors to give back bonuses and fees to the company. He also wants directors to personally compensate shareholders for the money the bank used to pay fines to regulators.

“This case is one more example seeking to hold officers and directors of the bank accountable for their conduct and not blame the managers who were simply told what to do,” Cotchett told me.

This month, Cotchett will file documents contesting Wells Fargo’s motion to dismiss the case. He’s not surprised by the bank’s defense, which has been to plead ignorance on behalf of the top brass.

Read on.

Proxy firm ISS urges shareholders to dump 12 Wells Fargo directors

An influential proxy advisory firm in a report Friday urged shareholders to vote against 12 of Wells Fargo’s 15 directors over the bank’s sales scandal, the latest blow to the bank’s effort to move past the controversy.

In the report, Institutional Shareholder Services said the 12 members of the board’s audit, risk and human resources committees “failed over a number of years to provide a timely and sufficient risk oversight process that should have mitigated the harmful impact of the unsound retail banking sales practices that occurred from 2011-2016.”

ISS recommended yes votes for the three other board members – new CEO Tim Sloan and newcomers Karen Peetz and Ronald Sargent – at the bank’s annual shareholder meeting April 25 in Florida. Proxy advisory firms such as ISS play an important role in shaping the voting of big institutional investors such as pension funds.

Read more here: http://www.charlotteobserver.com/news/business/banking/article143304604.html#storylink=cpy

Bank of America should split chairman, CEO roles, advisory firm says

Bank of America shareholders should vote for a proposal to split the CEO and chairman positions at the Charlotte-based bank, a shareholder advisory firm recommended this week.

Institutional Shareholder Services joins Glass Lewis, another major proxy advisory firm, in backing the shareholder proposal that is being voted on at the bank’s April 26 annual meeting.

Brian Moynihan currently holds both titles at the nation’s second-biggest bank by assets. If approved, the board would be able to phase in the policy for the next CEO transition, according to the proposal.

“The company’s size, complexity, and legacy legal and regulatory concerns suggest that shareholders would benefit from the strongest form of board leadership structure in the form of an independent chair,” ISS said in its report dated Thursday.

Read more here: http://www.charlotteobserver.com/news/business/article143391969.html#storylink=cpy

Dimon calls for regulatory changes in shareholder letter

JPMorgan Chase & Co Chief Executive Jamie Dimon devoted one-third of his annual shareholder letter to arguments for changing regulations, particularly those on bank capital and liquidity, as well as home mortgage loan financing.

Current regulations are inconsistent and have left banks with “too much capital,” some of which could be used to “finance the economy without sacrificing safety,” Dimon said in the 17,349-word letter released on Tuesday.

He also warned that anti-trade policies could be disruptive and geopolitical risks are in a “heightened state.”

Read on.

Fannie & Freddie Shareholders Want Billions

HOUSTON (CN) — Shareholders have sued the Department of the Treasury and the Federal Housing Finance Agency, claiming their $195 billion “net worth sweep” of Fannie Mae and Freddie Mac in 2012 illegally sent all their dividends to the U.S. Treasury rather than shareholders.
The Federal National Mortgage Association (Fannie Mae), and The Federal Home Loan Mortgage Corporation (Freddie Mac), are government-sponsored private companies that own or guarantee trillions of dollars in U.S. home loans. They buy home loans from banks, freeing up the banks to issue more home loans.
After the financial crisis began in late 2007, as the value of securitized home loans collapsed, Congress in July 2008 passed the Housing and Economic Recovery Act of 2008, under which Fannie and Freddie received a $188 billion government bailout.
The Act also created the Federal Housing Finance Agency and authorized it to appoint itself conservator of the companies, which it did in September 2008.
Lead plaintiff J. Patrick Collins a Freddie Mac stockholder, filed the lawsuit on Oct. 20 in Federal Court.

Read on.

Wells Fargo hit with shareholder class action lawsuit over sales practices

A shareholder class action lawsuit was filed against Wells Fargo & Co on Monday that alleged the firm misled investors about its financial performance and the success of its sales practices.

Wells Fargo, the United States’ third-largest bank by assets, agreed to pay $190 million earlier this month to settle regulatory charges that some of its employees opened as many as 2 million accounts without customers’ knowledge, in order to meet sales targets.

Robbins Geller Rudman & Dowd LLP announced the lawsuit and is seeking class action status on behalf of buyers of the company’s shares between Feb. 26, 2014 and Sept. 15, 2016.

The lawsuit, which was filed in the U.S. District Court of Northern California, comes nearly a week after Wells Fargo chief executive John Stumpf faced U.S. Senate lawmakers about his oversight at the bank.

Read on

We Must Protect Shareholders From Executive Wrongdoing! Eric Ben-Artzi, Deutsche & the SEC

I know I did the right thing, Mr. Eric Ben-Artzi told several newspapers this last week (FTand Bloomberg).

He writes, “I turned down a whistleblower award.” Former Deutsche Bank employee and whistleblower, Eric Ben-Artzi turned down a whistleblower award of $8.25 million. “I refuse to take my share,” he said.  “Although I need the money now more than ever, I will not join the looting of the very people I was hired to protect. I never intended to turn a job in risk management into a crusade, but after suffering at the hands of Deutsche executives, I will not join them simply because I cannot beat them.”

He continues, “I request that my share of the award be given to Deutsche and its stakeholders and the award money clawed back from the bonuses paid to the Deutsche executives, especially the former top SEC attorneys.” Mr. Ben-Artzi says that the USD $55 million U.S. Securities and Exchange Commission (SEC) penalty which the award is based upon should have been paid by Deutsche executives.

A powerful gesture. One that hopefully will cause people to pay attention to the malfeasance underlying the whole 2008 financial debacle. My hat’s off to Mr. Ben-Artzi.  I applaud his stance.

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Regards,

Richard

Richard M. Bowen III
richard@richardmbowen.com
www.richardmbowen.com/
214- 604-5492

Federal court tosses #Fanniegate suit seeking to inspect Freddie Mac’s records

In what is already being called a “blow to shareholders,” by John Carney of the Wall Street Journal, a federal court in Virginia ruled Tuesday that a Freddie Macshareholder does not have the right to inspect the government-sponsored enterprise’s financial records, thanks to the conservatorship agreements that went into effect when the government took over Freddie Mac and Fannie Mae.

The United States District Court for the Eastern District of Virginia tossed out a lawsuit brought against Freddie Mac by Tim Pagliara, who sought to review the GSE’s books in an attempt to prove that the government is illegally taking the profits of Freddie Mac and Fannie Mae from shareholders.

Pagliara is the CEO of CapWealth Advisors, the leader of Investors Unite, an organization that seeks to protect the rights of all the investors that own shares in Fannie and Freddie, and a prominent member of “#FannieGate”, a viral movement on Twitter that has become shorthand for the government’s supposed theft of Fannie and Freddie.

Read on.

Whistleblower Rejects Award to Protest SEC and Wall Street’s “Looting”

What guts!

‘After suffering at the hands of the Deutsche [Bank] executives I will not join them simply because I cannot beat them’

A Deutsche Bank whistleblower rejected his portion of a $16.5 million award for exposing corporate crime because the Securities and Exchange Commission (SEC) let bank officials off the hook, he said Thursday.

Former risk manager Eric Ben-Artzi, who went to federal authorities in 2010 after he was fired from Deutsche Bank for alerting its officials of improper accounting, said the bank and the SEC were so deeply entwined in a revolving-door culture that commissioners refused to properly investigate the firm’s top executives.

“This goes beyond the typical revolving door story. In this case, top SEC lawyers had held senior posts at the bank, moving in and out of top positions at the regulator even as the investigations into malfeasance at Deutsche were ongoing,” Ben-Artzi wrote in an op-ed for the Financial Times.

Instead, the punishment fell on the bank’s rank-and-file employees, he said, with the SEC imposing a perfunctory $55 million fine on the institution that sent the shareholders and workers out the door and left top executives untouched.

Read on.

Freddie Mac must face revived lawsuit over risk disclosures

4Traders:

A federal appeals court on Wednesday revived a lawsuit accusing Freddie Mac and several former top officials of defrauding shareholders by concealing its subprime mortgage exposure and its inadequate risk management prior to the 2008 financial crisis.

The 6th U.S. Circuit Court of Appeals said a lower court judge erred in concluding that the Ohio Public Employees Retirement System did not sufficiently allege that its losses were caused by Freddie Mac’s disclosure shortfalls.